My cofounder Hemant (@hemantgangolia) has been living in the US since 6 years and has tried multiple times to invest in India. He couldn't go ahead with the process because bank account opening was a challenge and the process after that wasn't clear. There is complexity around taxation, moving money back and a general lack of clarity on where to invest.
Even though there are currently over 30 million Indian expats globally, there are no digital, full-service solutions offered for them specifically. US solutions focus only on US investments and Indian solutions focus only on Indian customers—this makes the India <> US belt underserved. Indian banks with overseas branches offer these services, but investors don’t trust these banks because of conflict of interest. There are other small players in the market but they expect customers to do their own service, which is not what customers want, based on our learnings.
We found a lot of other Indian expats in the same situation as us - wanting to invest in India for financial and emotional reasons, but unable to do so easily or consistently. We wished a simple product existed to solve for this online. We couldn’t find one, so we built it.
Inri is like Wealthfront for your India investments. It is a web platform that offers curated mutual fund portfolios and solves for all tax compliance and repatriation needs online. We have curated the funds based on performance, history and compliance based on your resident country, and funds are selected based on your risk preference, similarly to Wealthfront. We facilitate investments through central platforms like National Stock Exchange and show the holdings via a dashboard on the platform once the investments are done. Additionally, we do this while making tax compliance and repatriation easy.
Just log in to the platform, upload your documents, approve the emails with details confirmation and you’re sorted. Currently, only people with a PAN card (Indian financial identity document) can invest.
Our early customers are all people who have tried doing this before, but gave up because of all the hassle. The fact that they could get invested in just 2 days vs weeks for traditional alternatives was unheard of to them.
We know this is a bit of a niche product for HN but we also know that there are quite a few Indian expats like us here, who could make use of it—and we hope it makes interesting enough reading for everybody else. We would love to get your feedback! Thank you!
Simple products do exist which provide exposure to passive indexes for India equities in USD. Any NRI in US can invest in these ETFs at reasonable cost (about 0.64%-0.85% Expense Ratio):
1) iShares MSCI India index ETF - $INDA (USD) : https://www.ishares.com/us/products/239659/ishares-msci-indi...
2) Wisdomtree India Earnings ETF - $EPI (USD) : https://www.wisdomtree.com/investments/etfs/equity/epi
Even active funds like WAINX, EPGIX havent beaten investing directly over the long run. You can compare these with NIFTY growth % - USD/INR growth % - two-way currency transaction charges to confirm.
This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.
2. Depth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.
[1] https://en.wikipedia.org/wiki/Jesus,_King_of_the_Jews#INRI
And it really is "the West" (not just US), since the original phrase is Latin.
[1] https://en.wikipedia.org/wiki/Inri_appam [2] https://www.youtube.com/results?search_query=inri+appam+east...
Also, it's funny (and probably not accidental) that it's also called Pesaha, which is basically the name for the Hebrew/Jewish celebration from which Christian Easter is derived.
I'm a Hindu, so my mind definitely did not go there.
[1]: https://www.google.com/maps/@12.8738405,74.8453608,3a,75y,90...
Keep posting your questions and we're happy to answer! Do try out the platform if you're interested.
This is a huge pain point for US persons investing in foreign mutual funds. This made me liquidate all my ETFs/mutual funds in India and move the money to individual stocks or property.
If you can make it easy for NRIs to invest in a basket of individual stocks, a NRI-friendly smallcase (https://www.smallcase.com/) if you will, that would be amazing.
How do you factor the US taxation at marginal rate (instead of the more favorable long term capital gain tax rate) factor into your ROI comparison between investing directly in India vs an US-based India fund (which enjoys all the tax benefits)?
The target audience for this would know this, but it's useful to be reminded. INR (Indian Rupee) depreciates on average about 4% each year against USD (US Dollar). When you look at the gains from investments in India in USD terms, it would be lower due to the continuously weakening currency. As an emerging market and one with a still-developing stock market, the returns could be comparatively a lot higher along with volatility.
People in India who "invest" ("gamble" may be a better term) in the stock market are used to larger double digit returns and chase "multi baggers" (check some financial publications in India and you'll find many headlines about multi baggers). This makes the same bunch beat a retreat at the first sign of a downturn.
Tax laws in India are getting more complex and onerous (because the government believes everyone to be a tax evader unless proven otherwise), and it seems like the government wants to slow down the outflow of money from the country while getting a larger slice in advance. Though the government wants to attract non-resident Indians to invest (they've historically sent a lot of money into the country), it's also reluctant to provide an attractive taxation and tax compliance experience. If you choose to invest through this or any other platform, keep an eye on the changing tax laws so that you can exit before things suddenly become painful with very little notice. As an example, though the union budget with tax changes was presented in the beginning of February in the parliament, the government made a slew of changes that impact whole classes of mutual funds just a few days ago with no discussion in parliament and passed all of those (because the ruling party has a majority).
2. Indian Taxation: This has been the trend in almost every country. The taxes do not matter if the yield is still higher than your Western yield. It'll pay for itself.
3. Money Outflow: In my humble opinion, this is the real concern. You can pay high taxes, and still come out ahead. But if you can't get your money out, that's a real problem. And companies will leave because of that. I think the uncertainty of one's money is what's preventing a foreign investment boom in India.
If you are interested in the product, do check out the website / fill the form and we will reach out
US stock markets and regulations are not without fault but they are leagues better than stocks in countries like India and China.
Oh and to add on to another excellent point you brought up - Indian regulations are unstable and change on a whim. India’s government recently proposed subjecting long term debt holdings to tax, a move that is widely criticized.
When was Hindenburg "banned" from doing reports in the US? And which agency in the US "blocks" companies from reporting fraud?
1. Yes it's true that INR has depreciated vs $. But all of that depreciation has been coming in the zero interest regime we have been in the last decade. If you see the previous decade, INR was flat vs $ and NIFTY also grew more than S&P500. Point here is to say that there are financial cycles and the next cycle is likely going to be different (because of higher interest rates at least in the medium term) than the last one. Additionally, higher interest rates also makes US equities less attractive than what they were in the last decade, and India is likely to be among the fastest growing economies in the next decade so a good bet for diversification for 5-10% of your wealth.
2. Can you elaborate on tax laws becoming more onerous for NRIs? The Feb law change doesnt affect NRIs remitting money outside, so dont think is relevant in this case.
> India is likely to be among the fastest growing economies in the next decade so a good bet for diversification for 5-10% of your wealth.
I'm going to ask this in the most laymen way possible...how is it possible that a country that is growing faster than the US depreciates the money value relative to the US by so much? I genuinely believe India has stronger growth, but those two facts don't seem to match up. One would think that a stronger economy would imply more investment, and thus push the price up on the currency. ELI5.
I see the value of your platform and in the past I’ve invested a lot of USD in india and gotten great returns. But when I needed my money out for grad school, I had to pay these outrageous fees. Even the amount exchanged for tuition is taxed at 0.5%, all other transfers at 5%.
My net return on mutual funds investments were not so great on a dollar by dollar terms.
It’s not just me, many (younger) NRIs would prefer to invest in US index funds or if they’re feeling risky invest in vanguard emerging market funds.
Edit: added reference
[1] https://taxguru.in/service-tax/tax-implications-forex-transa...
I'm sorry, what?
https://taxguru.in/service-tax/tax-implications-forex-transa...
2. You can file tax return and get a refund if your tax liability is nil or lower than tax collected at the end of the financial year.
This still doesn't make this situation better but it is not a charge, just an advance tax automatically deducted which needs to be adjusted or claimed back.
Still I feel it’s unfair in a globalized economy considering it’s reducing liquidity, as in you have to be a tax resident of some other country to avoid this steep tax. For example if you decide to take a year long sabbatical or retire in, say Portugal, you’d have to pay the tax every time you withdraw money for rent and groceries.
If you stay in Canada for more than 183 days in a year, you are deemed a resident of Canada. I don't understand why the tax applies.
> Still I feel it’s unfair in a globalized economy considering it’s reducing liquidity, as in you have to be a tax resident of some other country to avoid this steep tax.
It's not an additional tax. It simply changes when the tax is collected.
> For example if you decide to take a year long sabbatical or retire in, say Portugal, you’d have to pay the tax every time you withdraw money for rent and groceries. . The tax only applies if you have an Indian income of more than 15 lakh rupees and you are not a tax resident elsewhere. If you retire in Portugal, this does not apply to you.
https://etfdb.com/etfs/country/india/
Now granted, as far as I know, no major brokerage supports dollar cost averaging into an ETF (needs to be a mutual fund that trades once at close so you never get to benefit from any intraday volatility)
which "moves the goalpost to" https://www.google.com/search?q=india+mutual+fund
in fidelity, i can set up automatic investing / dollar cost averaging (wealthfront's entire business model, right?) into any mutual fund they allow access to. curious the advantages from your product over this.
This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.
2. Breadth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.
3. We are starting with mutual funds but plan to offer all asset classes for investments including real estates.
Also, DCA is just one part of Wealthfront, there are other advantages also, but that's a separate point.
For NRI's who do go to India, just go to any big bank like ICICI, HDFC etc. They will give you special treatment simply because of you are an NRI. Once your bank account is setup, open a Zerodha NRO account by submitting the docs to their local office. It can be done in two weeks if you have all your docs.
But yes it is a bit of a hassle especially if you want to go the NRE account route, so if this company can take away all those hassles then its a great option.
I lived in India until 2014—all the SIPs were shitty and ran old school software and UI. Maybe things have changed now, but 98% of India does not do any active investments other than Fixed and savings deposits.
1. WAINX is an actively managed fund, if you are just looking for tracking the Indian index (NIFTY), there's INDY here. Their tracking error (because of frequent currency transactions + cash requirements) cumulates to a large underperformance vs investing directly. In the last 5 years, there's a cumulative return of 14% for INDY vs 69% for NIFTY. Even accounting for currency depreciation and remittance charges, the $ adjusted return for NIFTY is at least 2x.
Even active funds like WAINX, EPGIX havent beaten investing directly over the long run. You can compare these with NIFTY growth % - USD/INR growth % - two-way currency transaction charges to confirm.
This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.
2. Depth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.
3. We are starting with mutual funds but plan to offer all asset classes for investments including real estates.
Let me know if any of this is not clear
[0] https://creativeplanning.com/international/insights/american...
Fun money the way in describing is an extremely small part of your portfolio which you don’t mind doing away with should it tank.
But eventually I have to remit back my profit? I will be affected right?
What is the value proposition you are offering by charging 1% management fee?
"Non-Resident Indian (NRI) Zerodha accounts can only be opened offline, unlike regular accounts." https://support.zerodha.com/category/account-opening/nri-acc...
Secondly, we are not just a way to invest faster but also offer continuous rebalancing services, and are an end to end platform for NRIs along with taxation and repatriation support.
Is this guaranteed by FINRA/SIPC?
These funds are invested in India directly, thus not guaranteed by FINRA/SIPC.
No idea if NRI's also have to do it.
https://www.ndtv.com/india-news/date-for-linking-pan-and-aad...
Aadhaar-PAN linkage requirement does not apply to any individual who is:
Residing in the States of Assam, Jammu and Kashmir, and Meghalaya; a non-resident as per the Income-tax Act, 1961; of the age of eighty years or more at any time during the previous year; or not a citizen of India.
https://www.incometax.gov.in/iec/foportal/help/e-filing-link...
(I don't think it's offensive or anything that level)
But it comes at additional cost. Accounting costs. You need to file taxes in India and you need to claim its credit in US. Extra paperwork both sides. Foreign tax credit is not 100%, it is close enough, but you lose small change claiming it back. Then there is lag in selling something and being able to use that money in USD. You need to fill forms, get CA certificates and work with banks to get money back, takes time and takes money to get that done. Maybe the incidental costs are 0.1%, maybe they are 1% if you start counting the time you spend.
Also we can not compare returns directly against Indian equities. I will need to look it up but I believe some stocks are locked to the maximum for foreigners (maybe at 50%) so you can not buy any more unless a foreigner sells ... although the number of such stocks may be limited, if you can not buy and sell like an Indian, your returns can not be comparable. They may incidentally come out better, or they may incidentally come out worse.
In my personal experience working with 3 advisors (all companies managing thousands of crores = close to a billion dollars //* should cross check *// of total client funds), my returns never matched their benchmarks, and there was always some explanation, but never a match to their company wide returns for all clients.
We are not talking about stock picking here, since that is anyway individual investor dependent. Plus not all stocks have a foreign counterpart. So funds end up becoming a better diversified alternative.
We make the accounting experience simple and online as well but I'd definitely want to know more about your experience, if you are open to chat, feel free to fill the form on the website and we'll reach out
On tax, India and US (along with 80+ other countries) have a Double Tax Avoidance Agreement, so you dont get taxed twice. Local rules vary in terms of tax declarations though. E.g. In US, IRS mandates all foreign income to be declared. So you file capital gains taxes in India (online) and declare those in US while filing taxes here. We help with all the reporting here.
More details in the article here - https://www.goinri.com/blog/tax-implications-for-nris
Vested is for Indian residents to invest in US, we are for global NRIs to invest in Indian financial instruments.